Closing Your FHA Home Loan

April 7, 2022

When you start planning an FHA home loan, closing day seems very far away. But the closer to loan approval closing you get, the more you might start to wonder if something could interfere once the date has been set. 

And with good reason. There are things that can delay or even cancel a closing date. 

Some of those things are beyond the borrower’s control, others are well within your ability to prevent, as we’ll explore below. The most important thing is knowing what could interfere with your plans and taking steps to avoid the common mistakes some borrowers make ahead of signing the papers and accepting the keys.

Closing Day Delays: Things You Cannot Control 

Some things are entirely out of the borrower’s ability to anticipate or control. What if the appraisal comes back with corrections required? That’s something that, depending on how extensive the repairs or how long until a compliance inspection can happen, might require a new closing date.

What happens if your appraisal returns a value that is lower than the asking price of the home? You can’t be forced to close the deal, but renegotiating the deal could take more time than you realize. What if you already had seller concessions planned and now have to return to haggling over those as well? 

And then there’s Mother Nature. In decades past, many borrowers never considered the idea that a forest fire, flood, hurricane, or other natural disaster might interfere with the purchase of their new home. While these problems have always been with us, in the 21st century with climate change and many other problems, what was unlikely in the past is far less unlikely for many future borrowers.

And with that in mind, what happens when you have applied for an FHA mortgage and get through the approval process, only to see the damage in a storm, fire, flood, or other incident before closing day? 

In these situations you will need to work closely with the lender. There are procedures that can help determine whether it’s possible (or a good idea) to move ahead with the mortgage. 

Can the damage be repaired sufficiently to restore or maintain the home’s remaining economic life? Does the borrower even want to close the deal at this stage? There are many questions to answer.

Issues the Borrower Can Control

Some things are within the borrower’s ability to control and some of those issues could affect your closing date. One such issue? Incomplete or inaccurate information submitted as part of your application. If you fail to provide all the required information such as the sources of your down payment, you may find the closing date can’t proceed as originally scheduled until those issues are sorted out.

Some make the mistake of assuming that once your lender has run your credit as part of your FHA home loan application that your credit reports will not be reviewed a second time. 

This is not true. If your credit scores change in the meantime your lender may consider requalifying you for the loan. It really is as simple as that--the lender must be confident that you are a good credit risk for the loan, and if your finances change too much in the negative when the lender compares your first credit pull with the second, that could be a serious problem when it comes to getting to closing day.

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